Health insurance rebate creates incentive for healthier food consumption

Posted by AFN Staff Writers on 3rd April 2013

A scheme that offered a health insurance rebate that lowers the cost for healthier supermarket foods, such as fruit and vegetables and wholegrain foods, has been successful in improving the diets of shoppers. The scheme also appears to have reduced the consumption of nutritionally less-desirable foods.

The findings by the global research organisation, RAND Corporation, which are based on a scheme developed in South Africa, demonstrates an alternative to tackling nutritionally-poor dietary patterns. Up until now, preventative health advocates in Australia have promoted the discouragement of ‘junk foods’ by suggesting policies of heavier taxation on so-called ‘unhealthy’ foods.

Private health insurance rebate program for ‘healthy’ foods

Researchers from the RAND Corporation examined a program available to members of South Africa’s largest private health insurance company that provides a rebate of 10 to 25 per cent on purchases of healthy foods. The program, which started in 2009, now has about 800 participating supermarkets and enrolls more than 260,000 households.

Shoppers can get the rebate on a list of foods selected by a panel of nutritionists, physicians and behavioural scientists. The food list has over 6,000 items, which account for 20 per cent of food spending at supermarkets. Eligible items, including fruits, vegetables, whole grains, and non-fat dairy, are marked on supermarket shelves. The list excludes most items with added sugars or salt.

Less-desirable items that are discouraged by the program include cookies, lollies, chips, and soft drinks. The effects of the price subsidies appeared stable over time and the 25 per cent rebate had consistently greater impact than the smaller rebate.

The analysis of the supermarket scanner data, published online in March 2013 by the American Journal of Preventative Medicine, found that a rebate of 25 per cent increased the ratio of healthy to total food purchased by 9.3 per cent. The rebate also increased the ratio of fruit and vegetables to total food purchases by 8.5 per cent, and decresased the ratio of less-desirable food to total food purchases by 7.2 per cent.

The RAND Corporation said interest in the ability of food discount programs to help improve diets has been growing in the US and elsewhere. The US Congress approved funding in 2008 for a demonstration of the concept, and both employers and insurance companies in the US are beginning to test the approach.

Research method and findings

The research team collected supermarket scanner data linked to 170,000 households and surveyed 350,000 individuals about diets patterns. Individuals surveyed included both those who participated in the rebate program and those who did not. Regardless of how the information was analysed, lower prices for healthy foods were significantly associated with better self-reported diet.

“These findings offer good evidence that lowering the cost of nutritionally preferable foods can motivate people to significantly improve their diet,” said Roland Sturm, co-author of the study and a senior economist at the RAND Corporation. “But behavior changes are proportional to price changes. When there is a large gap between people’s actual eating behaviours and what nutritionists recommend, even a 25 per cent price changes closes just a small fraction of that gap,” he said.

The results of the individual surveys also suggested an improvement in diet quality as a result of the rebates. Based on self-report, individuals who received a 25 per cent rebate consumed an additional half-serving of fruits and vegetables each day. Those same participants reported being less likely to consume fast food, foods high in sugar and salt, fried foods and processed meats. The researchers said there was no evidence that the rebate program reduced rates of obesity or that fewer participants in the program were overweight.

Support for the RAND research project was provided by the National Cancer Institute and the National Institute of Child Health and Human Development. Other project researchers are Deepak Patel, Josiase Maroba and Darren Segal of Discovery Vitality.

Similar rebate programs in the US

Australian Food News reported in October 2012 that US supermarket Walmart had teamed up with a health insurance company to offer a 5 per cent discount on ‘healthier food’ options in its US stores.

Australia may need to catch up

Meanwhile, in Australia, preventative health researchers have focused more on ways to discourage the consumption of less-desirable foods. In February 2013, Australian Food News reported that the Cancer Council Australia had called for mandatory kilojoule labelling in fast-food outlets in Australia, in a bid to reduce consumption of fast food, which has been linked to obesity.

Taxation is another approach that has been suggested to encourage healthier eating in Australia. In September 2009, researchers from the University of Queensland and Deakin University recommended a 10 per cent ‘junk food’ tax, as well as salt limited in bread, margarine and cereals, an increased alcohol tax, and a ban on alcohol ads.